UNSW Professor Toby Walsh said tech companies' use of training AI models on books, songs and other copyrighted data was not fair use because the giants did not own the material.
"We may actually have to come up with new measures, new intellectual property laws, to deal with this disruption because this is a new technology," he told the National Press Club in Canberra on Wednesday.
"If we give the intellectual property away for nothing, then we are going to put those people out of work.
"We will wake up and wonder why is it that we don't have Australian authors. Why is it we don't have Australian film? Why is it we don't have Australian music any more? Because those people couldn't afford to live."
Prof Walsh said Australia needed to regulate AI, fearing the same mistakes made in relation to introducing guardrails for social media would be repeated.
"Social media should have been a wake-up call about the harms of unregulated AI," he said.
"We're about to supercharge the sort of harms we saw with social media with an even more powerful and persuasive technology."
Pointing to Australia's historic low on spending for research and development, Prof Walsh urged a boost in investment to bring the nation into line with other advanced economies such as South Korea or Sweden.
"Our future isn't in shipping red dirt and coal to China," he said.
"It will be in bits and bytes, increasingly AI generated bits and bytes."
Slamming Meta, the parent company of Facebook and Instagram, Prof Walsh said it was outrageous the tech giant was allowed to trade in Australia while paying minimal tax.
"My view is that if they choose not to contribute back to the economy generating their wealth, they probably shouldn't be allowed to extract from it," he said.
He spoke of the "anger, outrage, and despair" he felt about the political conversation surrounding AI being dominated by big tech companies.
"What I fear most is that I'll be back here in three or four years' time saying: "We tried to warn you. But another generation of young Australians has now been sacrificed for the profits of big tech."
